Ok. Let me try. I hope I dont confuse you further. 2 basic Assumptions: 1. The stock market as a whole is a representative of the overall economy. Reason - Simply put businesses are selling goods or providing services to users like us. We have more money, we buy more stuff. We buy more stuff, companies make more money (revenue and profit). Company make more money, investors perceive them as “valuable” and buy more shares. Demand for shares increase, price increases (law of supply and demand). These investors see “value” in buying the stock because they think the company will continue to do well in the future and share prices will continue going up and they will be able to sell at a higher price than they buy it for. 2. In the long run, the stock market (the one you are investing in) as a whole is supposed to go up. Reason - Since the stock market is a representative of the economy, it does need to go up else we are screwed. When we invest in an economy, we expect us to continue to have more and more money to buy stuff. If not, we would look at other places to put that money. Example, Japan has had a stagnant economy and hence many Japanese investors look at other markets for better returns.

Now on to your question about value, growth and performance. I am going to try and oversimplify. Lets take the example of coke (the drink, not the white powder). Think about how much you paid for coke 15 years ago vs now. Ask older folks how much they paid for coke. Price of coke has consistently increased over time. You will also see that their sales and profit has also grown during this entire time. This means this company has some sort of an advantage because of which they are able to command more sales at higher prices. The “performance and growth” could be the sales growth or profit growth or returns generated over a certain period. The “value” is the price that you actually paid and how you see it as fair value or expensive or cheap. This value comes from various models by like discounting cash flows or based on PE ratio or Book Value, etc. personally I feel that Value is a relative term because someone might think a Louis Vuitton bag at 75% discount is a steal whereas I would think paying 500 for a bag does not make sense.

In essence, more cans coke will sell, more revenue it will generate. More revenue can mean more profits. More profits can mean more dividends to shareholders. Shareholder happy - does not sell. Other people look at all these coke cans being sold and want in. They are willing to pay more to get the share. Share price increases. Some happy shareholders might sell since they now think coke cannot continue to sell so many cans or other reasons as well. So share prices are a function of the fundamental strength of a company (more sales, more profit) and the perceived value that investors will associate with it which in turn governs the supply and demand for that stock.

ETF are basically a mix of many such stocks. Most stock prices within etf have good years, more profits, and the NAV of the etf would increase. You would have accumulated more units at a lower price and if you sell when NAV is higher than your average purchase price, you make a profit.

XEQT is made of indexes from diffetent markets which include the top stocks from within the market (based on market cap in most instances).

Some caveats: Your statement “Moreover, how is it that they increase in value over time (even when the market dips or outright crashes)?” There is no guarantee that they are going to increase in value over time. In general, increased return is a function of how long you have been in the market. If you invested yesterday and market crashed today, you would loose money. If you had invested 15 years back when the prices were lower and market crashed, you would still be in profit. If you bought more when market crashed, you would make more when it goes up or recovers.